Author: Jerome a Paris

Crossposted from Daily Kos

In the next few days, we are going to roll out the new draft of the Energize America plan, and we count on you to help us improve this plan even further before it is unveiled formally during the energy panel at YearlyKos in Las Vegas on June 9.

Today, I am posting the Executive Summary of Draft Five and the list of the 20 Acts included in Energize America which give it its comprehensive and coherent character (we hope). The full plan will be posted tomorrow morning on DailyKos.

In the spirit of this endeavor, I ask that you comment and criticize this Executive Summary. As it is likely to be the first (and in many case, the only) document that most people will see, it needs to be compelling and convincing, and we count on your help to improve it further. So fire away with your comments, ideally with suggestions in complement to whatever criticism you may have.

Draft Five was prepared by George Karayannis (DoolittleSothere), with the help of the full Energize America team. Full credits will be given tomorrow.
Energize America – Achieving U.S. Energy Security by 2020 – Executive Summary

Objectives

To provide the U.S. with Energy Security by 2020 and Energy Independence by 2040 by: 1) reducing greenhouse gas (GHG) emissions by 75%, 2) reducing oil imports by 50%, 3) generating 25% of electricity from renewable sources, and 4) creating or preserving over three million new jobs by 2020.

Description

America remains dangerously and increasingly addicted to fossil fuels, which directly threatens national security, economic stability and the overall quality of American life.  In addition to remaining critically dependent upon imported oil to meet transportation needs, America remains highly dependent upon domestic coal to meet its needs for electricity.  The rapidly growing use of both of these fossil fuels generates enormous amounts of GHGs, which become trapped in the earth’s atmosphere and contribute to global warming and its associated extreme weather events and sea level changes.  

Interruptions to oil, gas or coal supplies by natural or man-made events can cause significant and prolonged economic pain and social turmoil with little or no warning.

America once led the world in both automotive and renewable energy engineering, but has seen this lead vanish to foreign competitors along with well over a million manufacturing jobs.

Energize America is a grassroots effort created and refined by informed citizen activists, and not by lobbyists or politicians.  As such, it takes an unvarnished and objective look at U.S. energy policy with the single goal of achieving U.S. energy security by 2020, defined as the ability to withstand a prolonged supply interruption, and U.S. energy independence by 2040, defined as energy self-sufficiency.

Energize America provides an ambitious but achievable 20-point plan to wean America from its fossil fuel addiction, to dramatically and responsibly reduce GHG emissions, to rebuild America’s manufacturing base, and to insulate the American economy from the effects of political turmoil, natural catastrophes and shrinking oil supplies worldwide.  

Energize America strongly favors a free market-based approach to solving our energy dilemma, though the plan is clearly guided by a strategic vision of a sustainable energy future and a public-private partnership model based on the highly-successful Apollo lunar program.

Energize America will leverage the incredible power and innovation of American industry to research, develop and commercialize energy efficiency technologies that will provide significant and continuous improvements to American consumers, and will help focus and unleash this creativity through clear and consistent policies and substantial long-term tax and regulatory incentives.

Energize America aims to create a level playing field for all energy providers, consumers and technologies.  For renewable energy sources, this will mean subsidizing the development and deployment of wind, solar, biomass and other solutions.  These investments will help these clean and local sources of energy compete more effectively with fossil fuels, which have benefited from decades of direct subsidies and other benefits.  Figure 2 below highlights one example of the historical disparity in federal financial support for nuclear and wind power – with nuclear power enjoying nearly 40 times the financial assistance of wind over an initial 15 year development period while delivering only slightly more gross electricity production.

Benefits

Energize America will transform American society – from the way we generate and use energy, to the way we design and drive vehicles, to the way we think about energy efficiency and conservation, to the way we deal with foreign governments.  In short, Energize America will create an energy-aware culture that treats energy as a strategic and vital economic resource, and which leads the world in the design and manufacture of renewable energy systems and energy efficient products.

Energize America will:

• enable Americans to soon drive vehicles that are far safer, cleaner, and dramatically more fuel-efficient than today’s vehicles,
• maximize energy efficiency in homes and businesses,
• strengthen the U.S. industrial base,
• ensure that the United States leads the world in the benefits of clean coal, in the design, manufacture and export of renewable energy systems, and in the reduction of GHGs,  
• save taxpayers money by lowering the cost of operating federal, state and local governments,
• save the US economy billions of dollars per year through reduced medical and other costs associated with global warming and pollution.

Most importantly, Energize America will ensure that all Americans can enjoy continued access to safe, reliable and affordable energy.  

In sum, Energize America will save Americans trillions of dollars in energy costs and reduce GHG emissions 75% by 2020, and make energy independence by 2040 attainable.

Benefit Examples

Homeowners – will save money from:
1)    highly energy efficient dwellings,
2)    an ability to directly control energy costs,
3)    greater energy provider choice, and
4)    the ability to generate some or all of their own electricity needs.

Businesses – will benefit from:
1)    energy-optimized buildings and factories,
2)    increased control over energy costs,
3)    greater ability to generate some or all of their energy needs, and
4)    access to new markets for energy-efficient products and services

US Automakers – will profit from:
1)    access to a ready market for ultra fuel efficient vehicles
2)    the creation and retention of over 1 million auto manufacturing jobs
3)    a rare opportunity to regain a competitive edge globally

Communities – will gain from:
1)    energy availability in the event of an unplanned, large-scale power failure
2)    energy solutions matched to local needs and resources
3)    new jobs from renewable energies, particularly for rural and remote communities
4)    enhanced ability to attract and retain new residents and businesses

Environment – will benefit from:
1)    stabilized GHG levels
2)    the protection of natural resources and designated ecosystems

Energize America will undoubtedly be attacked by special interests — namely the fossil fuel lobbies that will resist its aggressive migration to renewable energy sources.  In addition, those who do not agree that global warming poses a growing threat may challenge its GHG emissions goals.  Energize America will not please everyone, but it is designed with all Americans, and all future generations, in mind.  Following is a summary of Energize America‘s position relative to existing energy sources.

Oil
Energize America is driven by the reality of ‘Peak Oil’, the fact our planet is reaching or has reached an irreversible period of shrinking oil production- which is compounded by rapidly growing demand worldwide.  Tar sands and other oil sources can provide some stop-gap relief from Peak Oil but cannot fully replace increasingly expensive and rare oil. Energize America aims to make the U.S. functionally free from imported oil by 2040 for national security, economic, and environmental reasons.  

Coal
America enjoys the largest coal reserves in the world, which is both a blessing and a curse.  Coal can meet our long-term needs for electricity and can also be liquefied into oil for transportation.  However, the mining of coal can be devastating to the environment if not done carefully, and the burning of coal can release significant amounts of GHGs into the atmosphere if not done responsibly. Energize America aims to minimize the environmental and GHG impact of coal use.

Nuclear
Nuclear power is experiencing a political resurgence of sorts, and several new plants are in various stages of planning.  However, the nuclear industry enjoys huge subsidies that shield the industry from nuclear disaster liability.  The nuclear industry and our government have also failed for decades to solve the nuclear waste problem.  These issues must be addressed before nuclear power is more widely used.

Investment

Energize America will require an investment of approximately $250 billion through 2020, or roughly $20 billion per year – a strategic investment that will provide substantial returns immediately and for generations to come.  Included in Act XX is a balanced funding strategy to achieve U.S. energy security.  

Energize America Acts

The following Acts are detailed in the full version of the plan (to be posted tomorrow):

I…….The Passenger Vehicle Fuel Efficiency Act (“500mpg cars“)
II……The Transportation Industry Efficiency Act (“Long Haul“)
III…..The Fleets Conversion Act (“Mass Transit“)
IV…..The Community-Based Energy Investment Act (“Neighborood Power“)
V……The Passenger Rail Restoration Act (“Bullet Trains“)
VI…..The Clean Coal Generation Act (“Clean Coal“)
VII….The Wind Energy Production Tax Credit Act (“Reap the Wind“)
VIII…The 20 Million Solar Roof Act (“Harness the Sun“)
IX…..The Renewable Portfolio Standards Act (“Fair Everywhere“)
X……The Federal Net Metering Act (“Get on the Grid“)
XI…..The State-Based Renewable Energy Investment Act (“Green States“)
XII….The New Energy Technology Demonstration Act (“Liquid Coal and Golden Glow“)
XIII…The Sustainable Energy Economic Prosperity Act (“Focused for Lasting Success“)
XIV…The Carbon Reduction Act (“Atmosphere Stability“)
XV….The Federal Energy Policy Enforcement Act (“People’s Energy Watchdog“)
XVI…The National Energy Efficiency & Conservation Act (“EnergySMART“)
XVII..The Home Efficiency Act (“C the Light“)
XVIII.The Demand Side Management Act (“Real Time Energy Pricing“)
XIX…The Telecommuter Assistance Act (“Work Smart“)
XX….The Energy Security Funding Act (“Paying the Piper“)

The case for regulation of business…

From Lincoln, Nebraska

While UnitedHealth Group profits were soaring and its CEO was collecting more than a billion dollars in stock options, Nebraska doctors, hospitals and patients were experiencing frustrating claim payment problems, according to Department of Insurance records.

(…)

“I understand good performance,” said Wagner. “But good performance ought to have some standards besides profitability.”

(…)

Market concentration — a few companies with big market shares in a state — is a growing trend.

Blue Cross Blue Shield of Nebraska had about 47 percent of the state’s health insurance market in 2004, and United had 22 percent, according to an American Medical Association national report. Nebraska is in a relatively good position, Wagner said. In some states one insurer has as much as 75 percent of the market, he said.

This concentration means physicians and hospitals have less negotiating power with the insurers. In Iowa, where Blue Cross Blue Shield has about 65 percent commercial penetration, “it’s my way or the highway,” said Filipi. “ You really can’t negotiate in that situation.”

Monopoly is an effective exercise of market power. Paying fines rather than paying claims is a rational business decision and thus a effective exercise of one’s “freedom”.

It increasingly sounds like we are going back in time by one century. Monopolies. Union busting. Rent capture by a privileged few. Growing inequality.

And the compliant media promoting it all as a good thing. Why is business behaving like a bad caricature of itself these days?

And where are our governments? Enforcing standards is their job.

The WSJ has a lengthy article in its Op-Ed pages by Judith Miller, a “former NYT journalist and a writer in Manhattan” about the “undeniable and unheralded non proliferation success of the Bush administration”.

It begs for a careful deconstruction, which is beyond my courage, as it is, unsurprisingly, an ode to the intelligence, diplomatic and military competence of Bush and Blair. It also reeks of casual name-dropping of the various players that she met:

Col. Gadhafi’s hip, 34-year-old son, Saif-al-Islam, told me in Vienna–where he earned an M.B.A. and lives when he’s not carrying out tasks for his father, or studying for a doctorate in political philosophy at the London School of Economics–that his father changed course because he had to. “Overnight we found ourselves in a different world,” said Saif, referring to the Sept. 11 attacks. “So Libya had to redesign its policies to cope with these new realities.”

But a review of confidential government records and interviews with current and former officials in London, Tripoli, Vienna and Washington suggest that other factors were involved. Prominent among them is a heretofore undisclosed intelligence coup–the administration’s decision in late 2003 to give Libyan officials a compact disc containing intercepts of a conversation about Libya’s nuclear weapons program between Libya’s nuclear chief and A.Q. Khan–that reinforced Col. Gadhafi’s decision to reverse course on WMD.

The context is of course the restoration of full diplomatic ties between the US and Lybia, and the need to prop up the Bush administration.

But can we at least agree that this proves beyond any remaining doubt that Judith Miller is a PR flak and not a journalist?

William Pfaff has a great article today, with the explicit title of “Why Europe should reject U.S. market capitalism” which I recommend that you read in full.

He reminds us that the current market ideology is just that, an ideology, and that it is thus a political choice, that has nothing inevitable about it and can be reversed. He traces its origins to the combined influence of Milton Friedman (monetarism), Van Hayek (rejection of totalitarism, associated with socialism and too powerful States) and Ayn Rand (the selfishness of superior people against the mob and the weak is a good thing).

This is what underlay the transformation of American corporate culture, and of the American business corporation from an institution with national identity, constrained to reconcile interests of owners, employees and community, into the modern global corporation, effectively controlled by its managers and mandated to the single objective of producing “value” for stockholders, while handsomely rewarded its executives.

This change transformed labor into an anonymous commodity and put both blue-collar and white-collar staff into competition with an effectively unlimited global labor supply, resulting in employment insecurity, reduced or static wages, diminished or eliminated benefits and pensions, and the destructive social pressures of falling living standards.

In the United States, the new model of corporate business has evolved toward a form of crony capitalism, in which business and government interests are often corruptly intermingled, the system resistant to reform because of the financial dependence of both major political parties on contributed money.

As I said, read it all. My only quibble is with the title of the article. I have used my proposal for an amended title as the title for this post…

Guess what indicator predicted the last recessions?

and guess which indicator the Federal Reserve has decided not to publish anymore?

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate.

As the Economist reminds us:

As Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon.” Monetary aggregates are a fickle guide to the economy over the next year, but over longer periods the link between money and prices still holds. Many big mistakes in economic history were made when policymakers ignored monetary signals: the Great Depression in the 1930s, the great inflation of the 1970s, and the financial bubbles in Japan in the late 1980s and East Asia in the late 1990s.

Those experiences surely suggest that central banks should keep a close eye on the growth in money alongside their immediate inflation goals.

From another article:

Money still makes the world go around. For some policymakers, anyway

it would be foolish to conclude that money does not matter. Throughout history, rapid money growth has almost always been followed by rising inflation or asset-price bubbles. This is why Mr Issing, virtually alone among central bankers, has continued to fly the monetarist flag.

The ECB’s monetary-policy strategy has two pillars: an economic pillar, which uses a wide range of indicators to gauge short-term inflation risks, and a monetary pillar as a check on medium- to long-run risks. The monetary pillar has attracted much criticism from outside the ECB; it is often dismissed as redundant, if not confusing. It was originally intended to guard against medium-term inflation risks. More recently, Mr Issing has justified the pillar as a defence against asset bubbles, which are always accompanied by monetary excess.

(…)

Unlike some central bankers, Mr Issing loves to be challenged, so he invited Don Kohn, a governor of the Fed, to tackle the ECB view that a central bank should sometimes “lean against the wind” to prevent an asset bubble inflating, by tightening policy by more than inflation alone would require. Mr Kohn argued the usual Fed line: because of huge uncertainties, it is too risky to respond to bubbles and therefore it is safer to “mop up” by easing policy after a bubble bursts. He tried to present the Fed’s approach to asset prices as the neutral one, ie, less activist than the ECB’s. But that is misleading. There is no such thing as “doing nothing”. Under the Fed’s approach, unfettered liquidity sustains a bubble.

This link between money and asset prices is why the ECB’S twin-pillar framework may be one of the best ways for central banks to deal with asset prices. A growing body of academic evidence, most notably from economists at the Bank for International Settlements, suggests that monetary aggregates do contain useful information. Rapid growth in the money supply can often signal the build-up of unsustainable financial imbalances, as well as incipient inflation.

To simplify:

– the Europeans follow money growth closely, and have been accused of being needlessly restrictive in their monetary policy, and to worry too much about non-existent threats (inflation) – and thus of strangling growth;

– the Fed has had, for most of the Greenspan years, a policy of easy money, and even easier money in times of crisis (most crises having caused, of course, by imbalances generated by the presence of too much of the easy money they provided in the first place). Their justification has been that it is impossible to determine asset bubbles, and thus it is better to deal with the aftermath – thus the policy of debt, debt, more debt to keep consumers spending

– the Germans say explicitly that M3 is a good medium term indicator of imbalances and bubbles, and the Bundesbank then, and the European Central Bank today, uses it as an explict policy tool against bubbles;

– today, the M3 shows clear signs of froth again in the USA (in fact, it never stopped since the mid-90s):

(Note that the Fed rate was stuck at 1% between 2002 and 2004, an unprecedentedly low);

– And, hey presto, let’s hide the relevant information.

Yes, let’s hide the most obvious sign that there is indeed a monetary bubble (i.e. something that can be blamed squarely, unambiguously at Greenspan’s feet), so that people do not worry unduly, and the cheerleaders in brokerage houses and the business press can keep the happy refrain of growth and “borrow, buy, borrow, buy, borrow, buy”.

from the Economist again

So, in scrapping M3, the Fed is looking like the odd man out.

Research by the Bank for International Settlements has confirmed that monetary aggregates do still contain useful information. In particular, rapid growth in money and credit as well as asset prices usually signals the build-up of economic and financial imbalances, which often cause financial stress later on. Central banks cannot use the money-supply numbers as a way to set monetary policy on auto pilot: but they would be foolish to ignore the hazard warning lights.

Unplug the hazard warning lights. Sounds par for the course for this administration.

I’ve argued in various instances (sorry, I cannot dig up the links right now) that the only solution to the Iranian nuclear brinkmanship crisis would come through a direct “peace agreement” between the USA and Iran that would include the following:

– an end to Iran’s non civilian nuclear programme
– an end to Iran’s support to anti-Israeli groups like Hezbollah
– security guarantees by the USA to Iran, and an end to threats of regime change
– the end of economic and other sanctions, and a return of Iran as a full member of the international community.

Well, according to this article (unearthed by Fran and posted in her invaluable European Breakfast news thread this morning), which quotes high level sources, including Colin Powell top aide Lawrence Wilkerson, that’s exactly what the Iranians offered, and THEY WERE REBUFFED BY THE NEOCONS.

See also this diary by vercencheto on the UN Security Council discussions.

Neo-con cabal blocked 2003 nuclear talks
By Gareth Porter

WASHINGTON – The George W Bush administration failed to enter into negotiations with Iran on its nuclear program in May 2003 because neo-conservatives who advocated destabilization and regime change were able to block any serious diplomatic engagement with Tehran, according to former administration officials.

(…)

“The secret cabal got what it wanted: no negotiations with Tehran,” Wilkerson wrote in an e-mail to Inter Press Service (IPS).

Wilkerson is specifically mentioned by name (and he contributed in writing), but others senior guys are quoted elsewhere. This seems like a well sourced article.

Porter is lambasted as a Khmer Rouge apologist in the National Review and other similar publications, but as he was a legislative assistant of John Kerry for a while, that seems to be part of the 2004 swiftboating process. Let the facts stand on their own, and they are damning:

The Iranian negotiating offer, transmitted to the State Department in early May 2003 by the Swiss ambassador in Tehran, acknowledged that Iran would have to address US concerns about its nuclear program, although it made no specific concession in advance of the talks, according to Flynt Leverett, then the National Security Council’s senior director for Middle East Affairs.

Iran’s offer also raised the possibility of cutting off Iran’s support for Hamas and Islamic Jihad and converting Hezbollah into a purely socio-political organization, according to Leverett. That was an explicit response to Powell’s demand in late March that Iran “end its support for terrorism”.

In return, Leverett recalls, the Iranians wanted the US to address security questions, the lifting of economic sanctions and normalization of relations, including support for Iran’s integration into the global economic order.

I really wish I could find links to my writings on the topic, because this so closely mirrors what I wrote a decent peace agreement would look like that it’s freaky (or that it’s reasonalbe, or that I have sold my soul to the Iranians…)

Leverett also recalls that the Iranian offer was drafted with the blessing of all the major political players in the Iranian regime, including Supreme Leader Ayatollah Ali Khomeini.

He presumably means Khamenei here, but the point that there was an Iranian consensus on that is important. ALL Iranians were spurned when this was turned down.

Realists, led by Powell and his deputy, Richard Armitage, were inclined to respond positively to the Iranian offer. Nevertheless, within a few days of its receipt, the State Department had rebuked the Swiss ambassador for having passed on the offer.

Exactly how the decision was made is not known. “As with many of these issues of national security decision-making, there are no fingerprints,” Wilkerson told IPS. “But I would guess Dick Cheney with the blessing of George W Bush.”

The usual players, and a partial story teller in Wilkerson (as he is explicitly on one side), but the accusations are pretty damn explicit.

But it was impossible to get formal agreement on the NSPD, the source recalled, because officials in Cheney’s office and in under secretary of defense for policy Douglas Feith’s Office of Special Plans wanted a policy of regime change and kept trying to amend it.

Opponents of the neo-conservative policy line blame Condoleezza Rice, then the national security adviser, for the failure of the administration to override the extremists in the administration. The statutory policymaker process on Iran, Wilkerson told IPS in an e-mail, was “managed by a national security adviser incapable of standing up to the cabal …”

So, the State Dept. sidelined, the neocons/checkenhawks set loose in the administration, and Rice unable to stand up to them… sounds plausible.

In the absence of an Iran policy, the two contending camps struggled in 2003 over a proposal by realists in the administration to reopen the Geneva channel with Iran that had been used successfully on Afghanistan in 2001-02.

That’s an important point to remember as well: Iran had shown a good deal of goodwill following 9/11, and helped out the USA in very real ways during that period.

On May 3, 2003, as the Iranian “grand bargain” proposal was on its way to Washington, Tehran’s representative in Geneva, Javad Zarif, offered a compromise on the issue [the US wanting Iran to give Al-Qaeda name before negotiations started], according to Leverett: if the US gave Iran the names of the cadres of the Mujahideen-e Khalq (MEK) who were being held by US forces in Iraq, Iran would give the US the names of the al-Qaeda operatives they had detained.

The MEK had carried out armed attacks against Iran from Iraqi territory during the Hussein regime and had been named a terrorist organization by the US. But it had capitulated to US forces after the invasion, and the neo-conservatives now saw the MEK as a potential asset in an effort to destabilize the Iranian regime.

The MEK had already become a key element in the alternative draft NSPD drawn up by neo-conservatives in the administration.

We’ll trade those you think as terrorists for those we think are terrorists. Fair enough… except if one side wnat to use one set of terrorists – sorry, freedom fighters – against the other party…

And apparently, even Bush was overruled!

Nevertheless, Bush apparently initially saw nothing wrong with trading information on MEK, despite arguments that MEK should not be repatriated to Iran. “I have it on good authority,” Leverett told IPS, “that Bush’s initial reaction was, ‘But we say there is no such thing as a good terrorist.'” Nevertheless, Bush finally rejected the Iranian proposal.

And thus we have the current escalation, instead of a sane grand peace bergain. The Iranians are rightly feeling threatened, and rationally see a nuclear bomb as their only protection (I would argue that in a sane world, the oil/Hormuz Straits weapon is good enough for them to fight back and cripple us, but we know that this administration is not sane – or defines “sane” very narrowly).

What a waste. What a fucking waste. The Iranians were ready to deal.

This administration doesn’t want peace, it wants war.

As France goes through another day of protests, the coverage in the US press is so appallingly bad that I thought I’d take advantage today of my posting rights to give you another version, to explain what’s described as irrational behavior by the French.

Let me say it as directly as I can: most of the coverage I have seen is either wilfully ignorant or purposedly lying, and they repeat a number of falsehoods about the French labor market that are, quite simply, shocking.

Let me try to correct the record.

Again, this should preoccupy you guys, because the underlying message is: progressive economic policies are failures, and only further “reforms” (read pay workers less and give them fewer rights, bust unions and cut taxes to corporates) will work. If even Us progressives buy that (as evidenced by a number of comments on my threads at the Orange place), what hope is there to change things?

Today’s culprits:

The LA Times (Rift Emerges Among Young Haves and Have-Nots in France)
The NYT (Four Ways to fire a Frenchman)
The Guardian (De Villepin stands firm on law as France heads out on strike)

Here are some of the lies they are spewing:

Riots are ongoing

It would seem, reading the US press, that Paris is burning (again). It wasn’t last October, and it isn’t now. Most demonstrations are peaceful, family affairs – people exercising their democratic right to free speech and demonstration.

These rallies have been marred, on the sidelines, by very small groups of criminals that take advantage of the crowds to steal form people and to attack the police form the safety of the crowds. These are still isolated incidents, despite all the images you may see – and they have very little to do with the protests themselves.

The protests are not violent, and they can in no way be described as riots. Go and read Alex at Toulouse‘s diary over at eurotrib: he was in one of the protests himself and took pictures. See for yourselves what most demonstrations look like.

The youth unemployment rate is extravagantly high

I’ve already written about this, but would like to be even more explicit about this. The unemployment rate for the under 24s in France is indeed 23%. But you have to remember that the unemployment rate is the ratio of unemployed to active population (i.e. those working or seeking work). Counted as a ratio to the overall youth population, unemployment is only 8%, just like in the UK or the US.

The right column id the proportion of youth that are unemployed (as a fraction of the whole age class). The left column is the employment rate: the proportion of youth that work. It is much lower in France, but this is explained to a large extent by the fact that a lot of the youth are students, and they do not need to work to pay for their studies.

See this graph: that’s the portion of youth that have to work while being students.

Students are not “active” in France, and thus the active population is higher, and thus the unemployment rate appears correspondingly higher even though the number of youth unemployed is no higher than, say, in the UK.

That makes the whole “France is in crisis” much less convincing when you start comparing 8.1% to 7.6%, right?

Note, US numbers can be found here:

Employment rate: 66.2% (as comapred to France’s 30.4%)
Unemployment rate: 11.3% (as compared to France’s 23%)
Unemployed: 7.6% of the total number of under-25s (as compared to France’s 8.1%)

It’s impossible to fire people in France

The biggest lie that’s been spouted is that it’s impossible to fire people in France. That’s simply untrue.

The NYT article is shamefully wrong on substance, and I encourage you to read the thorough debunking done by afew here

Here are a few more facts.

From Jean-François Couvrat, a labor market expert

(my translation)
Eurostat indicates that the main indicator to assess the flexibility of a labor market and the mobility of workers is the proportion of workers who have been in their job for less than 3 months. That proportion is 6.7% in France, higher than in the UK and than the 4.9% EU average…

From Blanchard (a well known MIT economist)(pdf):

The labor market is characterized by large flows–high rates of separations from firms, and high rates of hires by firms. In France for example, 1.5% of all jobs are destroyed each month and roughly as many are created– interestingly, this is about the same percentage as in the United States. As there are many reasons other than job destruction why a worker may separate from a firm, the flows of workers are typically much higher. In France, they are of the order of 4% per month (Pierre Cahuc and André Zylberberg 2004).

So France churns jobs just as fast as the USA. How’s that for “flexible”?

France does not create jobs

This is simply untrue, again. From the above Couvrat article:

French companies never stop creating jobs. In 1993, the worst recession year in a long time, they hired 3.6 million people; the number was 4.8 million in 2003, a year with weak growth, and 5.4 million in 2000, a boom year.

More striking, according to the OECD, France has actually created more jobs than the supposedly flexible UK and UK economies! (click for bigger – “Royaume-Uni” = UK, “Etats-Unis” = USA))

or this:

The full line is the total number of jobs; the other is the total number of hours worked. They both grew at a record pace precisely during the 3 years when the 35-hour week law was put in place (it is widely credited (pdf, in French, with abstract in English) with having created 300-500 thousand jobs) and the socialist government put in place a jobs programme for the youth – both measures have been since cancelled by the right wing government which, strangely enough, came to power in 2002.

So France actually created more jobs than the USA in the private sector, and more jobs both overall and in the private sector than the UK – precisely at the time when supposedly irrational measures like the 35-hour week were in force.

So, please, be extremely careful when you read article about the “rigidity” of the labor market, the “jobs for life”, and the unwillingness of French companies to create jobs. Most of it is, quite simply, untrue.

This is not to say that everything is perfect, far from it, but the problem is much smaller than everybody (including in France!) is led to believe.

Students are “privileged activists”

One of the nastiest narratives in that context is that presenting students as “privileged” people trying to keep their “lifetime employment” away from the banlieue immigrants (see the LAT article for that line). Nothing could be further form the truth. University students are low or middle class (the privileged go to the separate – and really elite – Grandes Ecoles system), and they are the main victims of today’s existing labor flexibility.

The real problem in France is that you do have an insider/outsider system. Students (like older people thrown out of companies when they lay off) are outside, and the new law keeps them even more on the outside. They already have the temp jobs, the short term jobs, they are already the first ones to be fired when companies get rid of workers. They already provide all the flexibility the system needs (and has, as pointed out above).

One solution would be to make everybody bear the flexibility, i.e. make it as easy to hire and fire middle aged males as it is for youth. That’s where everybody is pushing, and IT DOES NOT WORK in practise. The other solution is to bring back the youth into the fold, by giving them more stable prospects, like the Socialist Prime Minister Jospin did with the youth jobs programme in 1997 (5-year contracts to work in the social sector, i.e. help in schools, associations, NGOs, libraries, etc..) – it demonstrably worked.

The new jobs contract will help immigrants

The flip side of the argument about the “privileged” students is that they are keeping jobs away from the poor oppressed immigrants. No. They are in the same situation, and the banlieue youth are even more against the new contract, because it will make it even easier to discriminate against them. No restrictions to firing in the first two years means including for reasons of race, opinion, gender, etc…. Be fully compliant or you can be fired at any time, and get fired anyway after 2 years because who will give you a fully protected status then when they can fire you and get a new compliant kid instead. Lots of jobs don’t require such skills that you cannot be replaced easily by an equally well trained kid.

So please, please do not believe all these articles that say that French students are fighting a pointless battle against reality and globalisation, that France is hopelessly rigid (and violent) and its workers shamefully protected and that this reform is “necessary and useful”. It is neither.

This is an ideological fight. It’s a fight of the progressives against the relentless march of the logic of focusing only on short term corporate profits.

This has long been for me the image that symbolised the difference between the West and the rest of the world in terms of growing our economies: we understood, with various nuances, that you do not grow an economy by fiat; instead, you nurture it, you water it, you feed it, and let it bloom at its own rhythm. Those that simply try to pull on the leaves to get it to grow faster are doomed to fail.

Thus communism failed. Thus various forms of State socialism failed around the world. And thus the Bushworld is failing.
The West functions on trust and leverage. I trust others to do their job, and thus I can focus on my own, specialise, and trade my services/good with others without fear of (i) being unable to procure for my basic needs and (ii) being fairly compensated for my work. I don’t supervise others and their work because I know that the system generally enforces compliance and that most people do follow the rules.

there are two ways to fall out of the virtuous circle of cooperation and trust:

• If the others started to cheat, and the State failed to punish them, and I needed to make sure by myself that they actually did their job as promised, it would take me a lot of time and I would not do my own job properly. I’d have to worry about self-sufficiency again, or about enforcing individual trades much more closely;

• if I somehow wanted to get things moving faster, and started to impose quantitative objectives on others, and threatening violence if they did not deliver, it is unlikely that it would work for very long. Either the authorities would deservedly take me out, or my terrorised colleagues would suddenly lose all creativity and initiative and focus only on obeying the letter of my instructions.

That’s why the Soviet Gosplan was inefficient. Workers (and managers had no incentive to do their job well – they only had the incentive to fulfill the prescriptive obligations of the plan. If the plan said, “make x spoons, you’d make ultra thin spoons, to minimise metal use and sell the excess on the black market; if the plan then told you to produce spoons with a given thickness, you’d make them shorter; if it then told you you to make spoons of a given weight, you’d mke ultra-thick ones, and so forth…

As a general rule, people respond to incentives; and if the only incentive is the stick, your only goal will be to not be noticed, and do the bare minimum that will keep you out of trouble. The liberal Western system, for a large part, has been very different, by allowing people to experiment, to improvise, to be free and to benefit from the fruits of their work. a portion of the excess income was recaptured via taxes, but people could prosper and the State prospered behind them by taking a fraction of the wealth created after it was created, and not by trying to second guess (or impose) what would be created and capturing it beforehand.

This is a system where the State is essentially passive, at least in some sectors of the activity, and it simply provides a peaceful framework and stable rules for all. Wealth creation is elusive, spread around, hard to graps, but nevertheless real. It is not predetermined, planned or pre-ordained. In fact, as the example of the Gos plan shows, trying to preordain it makes it much smaller and much less likely. Thus my image of trying to pull on a plant. it’s much more smart to water it, wait, and harvest the fruits. But it requires patience and trust in (in this case) nature / the economic context.

This generally marks the difference between win-win situations (where you are happy to let the other get rich because you know you’ll eventually profit) and win-lose situations, where anything you let the other grab means something less for you.

Bushco are trying to bring us back to a win-lose world. They have decided that the only way the rich could get richer was by grabbing wealth from the middle classes, by capturing wealth instead of creating it. Thus the tax cuts, the budget cuts for the poor, the insouciance – they are just grabbing what’s there.

But they have the same attitude in their relationship to the rest of the world. Soft power is out. You cannot trust others, you cannot work on the basis of something so unquantifiable and measurable as goodwill, admiration and empathy; instead, you want coercion, certainty, obedience. “Let them hate us so long as they fear us”. it’s a very basic form of power, but it works. The only problem is that it gets you much less far than soft power, because people will stop doing what you want as soon as you stop forcing them.

Pull the plant, and it will grow… until it is torn out and dies.

Bushco are using the vast pool of American credit (monetary), admiration for the ideal USA (the land of liberty that can do no wrong), and goodwill accumulated over the past decades for a vulgar power grab. It is tearing down the fruit trees in a vain attempt to get more fruits.

It is doomed to failure, but it IS draining the resources, both material and immaterial of your country, and it is sending an ill wind across the world, by showing the worst possible example of greed, short sightedness and reliance on pure brute force.

Both your plants and your neighbors need that evil harvester to go away.

click on this graph (and the others below) for larger version

As the graph above shows, 2005 was a banner year for wind power, with a 43% increase over 2004 in terms of new capacity built during the year.
The other good news is that the boom was spread more evenly around the world this year, with Asia becoming an increasingly significant market:

The North American market jumps sharply, following the devastating consequences of Congress diddling around with the PTC support mechanism in 2004, which pretty much killed the market for the year. 2005 has been a record year in both the USA and in Canada, with the USA becoming, as I predicted a few months back (USA to become world leader in wind power in 2005) the largest market this year.

The PTC mechanism has now thankfully been extended till end-2007, which gives the industry another 2 good years (3,000 MW are expected to be built this year in the USA, and even more in 2007), but the stop-and-go nature of the renewal of that law has created massive headaches for the industry (what kind of industrial capacity do you invest in to produce 2,000 MW one year, 5,00 MW the next, and 2,500 MW the year after?), with consequences worldwide (delays, quality problems, and losses for the manufacturers) and for the USA (an understandable reluctance by manufacturers to build industrial capacity in the USA, where it might stay idle half the time).

In this industry like others, good government matters – and smart regulations make or break an industry. Right now, wind turbine manufacturing is in Denmark, Germany, Spain, all countries with consistent policies – and India.

India is the surprising leader in this sector from the emerging world, and it even boasts a world-class manufacturer, Suzlon, but China is not far behind and windpower is likely to enjoy massive development in that country in the coming years.

I’ve written about the sector regularly (see the links at the end of the diary), but I’d like to state again a few things, for the record:

Wind is increasingly price-competitive

The numbers above, based on my own calculations but using mostly public data, show that wind is still a tad more expensive than the baseload energies we are using in the West: nuclear, coal and gas, and thus it still requires some support mechanisms, but that does not take into account the following:

• nuclear is cheap in France because it was financed at sovereign interest rates. That’s the only thing that can male nuclear competitive: public long term funding. As it were, I personally think that it is a smart thing to do, and the State should be in the business of running nuclear plants – and should be the only one to do it. But private sector nuclear plants would likely come up with a price in the 5-7c/kWh range at best;

• coal is cheap because the cost of cleaning up the coal and of carbon emissions is still ony very partially incorporated in that cost. Impose stringent environmental standards in coal production, transport and burning, and make the sector pay for its carbon emissions, and you add at least 4c/kWh to the cost of that electricity, and you end up in the same range as nuclear, i.e. 6-7c/kWh;

• gas, at current natural prices (7c/mbtu today after an unexpectedly mild winter in the US, down from 15c/mbtu in December, but up from 2-3c/kWh when all the gas-fired plants were built a few years ago) is simply not competitive, as it adds 3-4c/kWh. Again, 6-7c/kWh production price.

Thus, wind power is, in reality, the cheapest power source today. It’s only because coal and nuclear get massive subsidies that they are still cheaper and that wind needs support in turn to be competitive.

In addition to these considerations:

• wind power creates more jobs per kWh than other power sources, and these jobs are well paying manufacturing jobs and/or jobs situated within local communities (operations and maintenance);

  

• wind power requires no imports from politically nasty countries. Today, the technology is to a large extent manufactured in Europe, and it can easily be brought into the US (and any other country that cares to develop its capacities) once a stable regulatory framework is put in place;

• wind power sustains local communities. It brings income (land leases for the farmers whose lands are used – and which, remember, can still be used for farming apart from the few acres needed for access roads and the turbines themselves, local taxes, and local jobs). Managed smartly, as in Spain, it can bring manufacturing jobs to a number of places;

• it has very few drawbacks. If you avoid particularly scenic areas, and bird migratory corridors, wind farms do no damage to the environment, bring tourism and, once installed, are very much appreciated by the local population.

If there is one cause that should be wholeheartedly supported by the progressives, this is it. Jobs, manufacturing competence, protection of the environment, support for local communities, and an end to dependence on nasty regimes around the world, it has no drawbacks. So I hope that, for once, this thread will not end up being dominated by those that say that it kills birds or that it is ugly.

See below (i) my links to the sector and (ii) some links on bird mortality.

Energy – some good news (for once)
Don Quixote meets Wall Street – financing wind farms
The future of power generation
Wind power: birds, landscapes and availability (I)
comment on PTC
Something to take your mind off indictments: Windfarm blogging
Wind power now CHEAPER for US retail consumers
USA to become world leader in wind power in 2005

:: ::

more on birds:

This diary summarises a few scientific studies and quotes the Royal Society for the Protection of Birds on the topic:
Wind power: birds, landscapes and availability (I)

See also these discussions in other diaries:
http://www.dailykos.com/comments/2005/11/4/94748/0848/21#21
http://www.dailykos.com/comments/2005/10/18/19482/063/25#25
http://www.dailykos.com/comments/2005/10/18/19482/063/44#44
http://www.dailykos.com/comments/2005/10/18/19482/063/76#76

and:
http://www.abcbirds.org/policy/windpolicy.htm (American Bird Conservancy)
http://www.audubon.org/chapter/ny/ny/wind_power.htm

Look at this graph, from the (now virulently anti-French, and thus not suspect of bias here) Economist:

France and Britain, when inequality is taken into account, are actually richer than the USA. And the FT, also not suspect of bias, explains why:

it was not a rise of profits or other non-labour income that squeezed the middle-ranking US citizen but an increase in the share of the top 10 per cent of wage and salary earners who have captured almost half the total income gains in the past four decades. Within that, there has been a vast increase of the share of the top 1 per cent, who gained more than all of the bottom 50 per cent.

Let’s go into more detail.

First, a little bit more from the FT article:

Superstars snap up American growth (Samuel Brittain, the FT’s well respected senior economics columnist, Feb. 10)

US left-of-centre journals are full of calculations showing how a middle-income earner would have to work more hours today than five, 10 or even 25 years ago to obtain basic modern necessities.

The stock Republican reply has been to point to the increase in productivity and average real income in which the US has outpaced most other leading western countries. But what is true of the average is not necessarily true of the median – the person in the middle. One of the American economists whom I most trust in this dense jungle, Robert J. Gordon, estimates that real median earnings per hour have hardly increased at all in the US – not merely under the wicked George W. Bush administration but over the preceding period, 1966-2001.*

The question is: who has benefited from the trend annual increase of around 2 per cent in US output per hour? Prof Gordon shows that there has been little long-term change in labour’s share in US income in the past half century.

What, then, was the source of the increased skewness of the income distribution? Prof Gordon is rightly suspicious of the conventional explanation that it has been mostly due to the pressure of skill-based technical change on the least skilled workers – the ratio of median earnings to those in the bottom 10th has hardly changed.

He concludes that it was not a rise of profits or other non-labour income that squeezed the middle-ranking US citizen but an increase in the share of the top 10 per cent of wage and salary earners who have captured almost half the total income gains in the past four decades. Within that, there has been a vast increase of the share of the top 1 per cent, who gained more than all of the bottom 50 per cent.

I went to the original sources mentioned in this article (The Polarisation of the US Labor Market, pdf) , and found some spectacular graphs, which simply have to be shown here…

In the past 30 years, there has been a steady increase in the gap between the rich (the “90”) and the median (the “50”), whereas the gap between the median and the poorest (the “10”), which also increased in the 70s, has now stabilised. (you could even argue that it imporved under Clinton and got worse the rest of the time)

This graph shows that everybody did better in the last 15 years than in the 15 years before that; in both cases the rich did better, but in the last 15 years, the poor did as well as the middle classes. The problem is this:

The middle is getting thinner. Jobs have been created at both ends of the spectrum, instead of throughout. So having a poorly paying job that sees its salary increase as much as that of the middle classes is a pretty small consolation from falling from the middle classes into the lower classes.

Which brings us back to our original graph, with a more detailed version below, from the OECD original study (this page allows you to explore the study, the actual graph is here (pdf)):

I have not been able to find the exact methodology for this graph, but the OECD is a pretty serious institution, and from what I can see, it looks like they have simply taken out of the calculation of the GDP the highest x% (with various values for x depending on “inequality aversion”).

What this says is that America is richer because America’s rich are richer than Europe’s rich. Take the very rich out, and America and Europe have pretty much the same standards of living (according to GDP numbers anyway).

As the FT’s columnist points out:

In any case, we can no longer say with as much confidence as before that redistribution will achieve very little. Tony Blair, prime minister, once said that reducing the earnings of football star David Beckham was not a priority. But if Beckham’s corporate equivalents now account for a substantial proportion of the national income, the matter looks different.

Does that mean another “soak the rich” campaign? One is indeed likely in the US. Republicans will not be able for ever to divert attention to religious and “moral” issues.

Thus, the conservative economics columnist of Europe’s foremost business newspaper expects a “soak the rich” campaign, and indeed seems to think that it would be pretty justified. What are you guys waiting for??

You are already poorer than the French, with no free healthcare, no permanent holidays, and no pains au chocolat. What more do you need to act?!